Previous Statements by CLF
» Cliffs Natural Resources Inc. Q4 2009 Earnings Call Transcript
» Cliffs Natural Resources Inc. Q3 2009 Earnings Call Transcript
» Cliffs Natural Resources Q2 2009 Earnings Transcript
Joining me today are Cliffs’ Chairman, President and Chief Executive Officer, Joseph Carrabba; and Executive Vice President and Chief Financial Officer, Laurie Brlas. At this time, I’ll turn the call over to Joe for his initial remarks.Joseph Carrabba Thanks, Steve, and thanks, everyone for joining us today. As we mentioned during our first quarter conference call, business conditions in 2010 has significantly improved since last year. The North American Steel Industry Capacity Utilization Rates all having moderated remained in the 70% range and better pricing across all of our business segments is compounding the positive impact from higher volumes. Although early stage signs of recovery from last year’s global financial crisis emerged strongly last quarter, leading economic indicators are pointing to softer growth over the next six to nine months. At this time, we are not seeing anything in the market that would dramatically weaken the demand for our products, and we expect our business to generate continued solid results throughout the balance of the year. Consolidated revenue more than tripled to a second quarter record of $1.2 billion, compared with $390 million in last year’s second quarter. Net income improved to $261 million or $1.92 per diluted share, up from $45 million or $0.36 per share in the second quarter of last year. Although we had strong results in each of our business segments, I take a lot of pride in reporting that our North American co-business shifted to profitability in the second quarter, contributing $23 million to consolidated sales margin. With this operation turning the quarter to profitability, and considering the supply constraints within the (med coal) market, the validity of our strategy is reinforced. We have always considered (medcoal) to be an ideal strategic fit for our merging diversified mining business model, and we will continue to enhance our (medcoal) assets with both on acquisitions as they line up with our high operating standards.
This month’s recent announcement, announce the acquisition of INR Energy’s coal operations demonstrates our commitment to executing this strategy. These operations will increase our North American coal production capacity to more than 7 million tons next year and 9 million tons in 2012. These assets strengthen Cliff’s global resource base to more than 175 million tons of metallurgical coal and more than 57 million tons of thermal coal.In addition, this acquisition affords us additional opportunities for geographic diversification with increased exposure to SEABORNE markets. Along with the reserve base, we acquired access to a river-loading terminal which enhances shipping flexibility for all of our North American coal production. This is consistent with our intent to increase exposure and access to high growth markets. In addition to this major acquisition, we are maintaining the acceleration of several of our North American coal projects. Last week, many of you attended the joint event with the Bucyrus executive and manufacturing teams featuring a live demonstration of our new Pinnacle longwall. Delivery of the longwall is expected by September, with production to commence in the fourth quarter. We are still on track to complete the Pinnacle prep plant upgrade in early first quarter 2011, six months ahead of our original plan. The (porto) project at Oak Grove is underway with more than 100 feet of shaft to construct it. We expect this project to be fully operational by second quarter 2011. Turning to iron ore, we expect demand for blast furnace pellets to remain steady for the remainder of 2010, providing us confidence in our North American iron ore sales volume guidance. Our North American iron ore operating team was successful in seamlessly implementing more than $30 million of capital projects in the quarter that could have represented major risk in 2010 production. One of the two major improvement projects included a (killemaring) and roller replacement at the Tilden mine. This is a major piece of equipment for firing pellets in our operations there. Read the rest of this transcript for free on seekingalpha.com